Simple wealth steps

AUSTRALIANS are better off than ever, according to a new income and wealth report.

AMP Bundaberg financial planner Justin Grogan said there was a common perception the cost of living was spiralling out of control and families were at breaking point.

But the report, Prices These Days - The Cost of Living in Australia, revealed incomes had outpaced the cost of living by about 20% since 1984, with the average household having an extra $224 spending money a week.

Households across all incomes and types are better off than they were in 1984, with even low income earners experiencing gains of $93 per week.

Pensioners also have an extra $61 per week in their pockets, while the much-discussed working families are $306 per week better off.

Mr Grogan said the cost of basic necessities were not what was eating a larger chunk of Australians' budgets but rather our desire to "keep up with the Joneses".

"We've become a nation of spenders, with the average household now spending 40% on discretionary items, such as recreation, holidays and eating out," Mr Grogan said.

"While splurging on our bigger lifestyles might be fun today, it may not be the best path to financial security.

"If people want to reduce debt, save and create wealth for the future, they need to reassess their spending and make sure their money is working as hard as possible."

Mr Grogan said there were some simple steps for cutting spending and building wealth.

Tips included doing a budget.

"Without a budget there's no real way of knowing how much is left at the end of the week to save, invest or go towards reducing debt," he said.

"A simple way of crunching the numbers is to use one of the many online budget trackers provided by financial institutions."

People should also look for ways to cut their discretionary spending, such as taking their own lunch to work and cutting back on take-away dinners or restaurant meals.

"There are also plenty of ways to make savings on necessities such as buying generic brand groceries and using discount petrol dockets," Mr Grogan said.